Orexigen Therapeutics, Inc.‘s (OREX) shares climbed significantly following a meeting with the US Food and Drug Administration’s (FDA) office of new drugs (OND) regarding the development path for its obesity candidate Contrave. Following the OND’s decision, Orexigen decided to resume the development of Contrave.

Orexigen is looking to gain approval for Contrave for the treatment of obesity, including weight loss and maintenance of weight loss. The company has a collaboration agreement with Takeda for the development and commercialization of Contrave in the US, Canada and Mexico.

Story so far….

In January 2011, Orexigen received a complete response letter (CRL) from the FDA for Contrave. The FDA expressed concerns regarding the long-term cardiovascular safety profile of Contrave and asked Orexigen to conduct an additional study. The FDA requested a randomized, double-blind, placebo-controlled trial of sufficient size and duration which would show that the risk of major adverse cardiovascular events in overweight and obese subjects treated with Contrave does not adversely affect its benefit-risk profile.

In June 2011, Orexigen met with the US agency’s Division of Metabolic and Endocrinologic Products (DMEP) regarding the CRL. Orexigen submitted a proposal for the proposed outcomes study and also put in a request for approval of a narrower indication (for patients with lower cardiovascular risk) until data from the proposed outcomes trial is scrutinized for label expansion.

Both proposals were shot down by the DMEP which said that the proposed study would be inadequate. The DMEP instead asked for a pre-approved cardiovascular outcomes trial and said that it would need to review data from a cardiovascular outcomes trial before granting approval for a narrower indication. Following the DMEP’s decision Orexigen held back its plans for developing Contrave until it gained further clarity on the US regulatory path.

Orexigen appealed against the DMEP’s decision following which the FDA’s OND decided that Orexigen could resubmit the new drug application for Contrave, if an interim analysis of the study – cardiovascular outcomes trial (CVOT) -, did not reveal any risk of major adverse cardiovascular events.

Following the clarity on the way forward regarding Contrave’s development, Orexigen intends to meet with the review division to finalize a protocol for the trial. The company intends to commence the CVOT in the first half of 2012, with approval expected in 2014.

Neutral on Orexigen

We currently have a Neutral recommendation on Orexigen which carries a Zacks #3 Rank (short-term Hold rating). The outcome of the meeting with the OND is encouraging for the company. Other companies that are working on gaining approval for their obesity candidates include Arena Pharmaceuticals Inc. (ARNA) and Vivus Inc. (VVUS).